12 August 2009

A few weeks back, I wrote that the market was incredibly overbought. Well, that was back when the S&P closed at 954.58. The market continued to surge higher and get even more overbought as it surged past 1000, tagging 1015 last Friday.

The market's downward action this week has worked off some of that overbought condition, and some tremendously bearish near-term projections have come out of hibernation.

But one market technician believes trading volume in recent days on the S&P 500 Index is a sign that the broad market gauge will test last month's lows, then likely fall under its March low either next month or in October.

The decline in volume started on Friday and suggests the S&P 500 will make a new low beneath its July 8 bottom of 869.32, probably next week -- on the way to a test during September or October of its March 6 intraday low of 666.79, said Tony Cherniawski, chief investment officer at the Practical Investor LLC, a financial advisory firm.

"In a normal breakout you get rising volume. In this case, we had rising volume for a while; then it really dropped off last week," said Cherniawski, who ascribes the recent rise in equities to "a huge short-covering rally."

The S&P has rallied more than 50% from its March lows, briefly slipping in late June and early July.

Friday's rise on the S&P 500 to a new yearly high was not echoed on the Nasdaq Composite Index, bringing more fodder to the bearish side, according to Cherniawski. "Whenever you have tops not confirmed by another major index, that's another sign something fishy is going on."

The second bearish projection appeared in the comments at Slope of Hope. The chart drew my eye, and soon enough, the host of Slope of Hope featured it in its own post. Here's SoH commenter Virginia Jim's handywork:

11 August 2009

The Rural Alberta Advantage first caught my ear while listening to the weekly CBC Radio 3 podcast. This three-piece from Toronto?!? has a catchy lo-fi pop sound that you may find enjoyable, so here are three examples of their work:

Markets and music.
They go together like chocolate and peanut butter, right? But with alliteration.
Then there's the old trope: "Bulls make money. Bears make money. Pigs get slaughtered."
This bloggy beast is my forum to post investment ideas to avoid the stock market from becoming a slaughterhouse. And to impose my meandering musical preferences on unsuspecting readers.
Step up to the trough and enjoy the slop.

Poke the Pig

If you want to contact me, make a comment on any post, or just send an e-mail to wershovenistpig at gmail.com.